by From Joachim Spangenberg and Lia Polotzek The discipline of economics has played and continues to play a major role in leading humankind towards the ultimate calamity. It is driven by world views and their ontologies, which are more based on Newton’s mechanics than rooted in modern science’s understanding of systems complexity (Spangenberg, 2016). To make good for its past harmful role, and to provide guidance for economic and other policies for a sustainable 21st century, economics must change. Change would have to be deep and broad; for instance, economics would have to change its ontology (the economy is a subsystem of society which in turn is embedded in the environmental systems), its epistemology (not least to accommodate ignorance and uncertainty), its anthropology (accepting
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from Joachim Spangenberg and Lia Polotzek
The discipline of economics has played and continues to play a major role in leading humankind towards the ultimate calamity. It is driven by world views and their ontologies, which are more based on Newton’s mechanics than rooted in modern science’s understanding of systems complexity (Spangenberg, 2016). To make good for its past harmful role, and to provide guidance for economic and other policies for a sustainable 21st century, economics must change. Change would have to be deep and broad; for instance, economics would have to change its ontology (the economy is a subsystem of society which in turn is embedded in the environmental systems), its epistemology (not least to accommodate ignorance and uncertainty), its anthropology (accepting human beings in their ambivalence instead working with the homo oeconomicus abstraction and its derivates) and its axiology (accepting diverse value systems to replace “economic rationality”).
Part of adapting its ontology to modern scientific standards would be to overcome the mechanistic world view and replace it by one based on a physical economy of matter and energy flows, and abolish equilibrium thinking and modelling to replace it by evolutionary approaches (Spangenberg, 2018). This would help avoiding what Herman Daly (2000) has called “dumb mistakes”, like for instance considering the collapse of agriculture (Bélanger and Pilling, 2019) as a minor problem, as agriculture only makes up for 2 to 4% of the GDP in affluent countries, without asking about what people will eat in that case. It would also offer the opportunity to better understand the physical processes of the environment impacting on the economy, for instance the role of tipping points and their relevance for cost-impact analyses of climate policies (Cai et al., 2015). In short, economics has to be reinvented if it is to become a force for leading us away from catastrophe – rather than toward it. Taking the science of complexity on board would be a first step in this direction.
Is this an illusory demand? Being a neoclassical economist has been the career and income base for scholars, consultants, administrators and politicians – they would hardly declare “mea culpa, mea maxima culpa” and leave their positions (they could hardly stay after their lack of real-world qualifications has been revealed). But this should happen as soon as possible, as even with environmental and climate evidence mounting, adaptation and precaution remain limited and restricted by the existing system logics and institutionally based motivational and incentive structures, rather than by externally defined “rational” motivations (Andersson and Keskitalo, 2018). Several schools of heterodox thought have developed the means for economic research and advice generation, like stock-flow consistent input–output models (Berg et al., 2015), system dynamics models like WORLD6, simulating potential future supply and supply deficiencies of a number of natural resources (Umweltbundesamt, 2018a), evolutionary models like the fully endogenised GINFORS (Umweltbundesamt, 2018b; Spangenberg et al., 2012) or cybernetic models based on orientation strategy simulating sustainable system behaviour in changing environments (Bossel, 2000).
So while there is an abundance of ideas and tools, it is still plausible to expect a continued dominance of neoclassical power holders, and an Economics 6.0 (if you count Physiocrats, classics, marginalists, Keynesians and neoclassicals as earlier incarnations of economics) will only become hegemonial once the representatives of the existing hegemony have disappeared, or standard economics has fallen into so complete disregard by decision makers that standard economists give up and leave the sinking ship. So far however, such a turn of the tide is not in sight as even without good prognoses, scenarios and policy recommendations for sustainability, standard economics has an important function in legitimising neoliberal policies.
http://www.paecon.net/PAEReview/issue87/SpangenbergPolotzek87.pdf